Megaupload Shut Down As Founders Charged

The US Department of Justice has arrested the co-founders of one of the Internet’s largest file-sharing websites, Megaupload and charged them with violating piracy laws.

Shutting down the website, federal prosecutors have accused the website of costing copyright holders more than $500m (£320) in lost revenue.

Like the majority of web-based file sharing websites, Megaupload claims that it took down copyrighted material once it was contacted by the copyright holders. The recent SOPA/PIPA legislation which prompted such an online backlash this week, seeks to impose much stricter piracy laws on such sites.

The US Justice Department said that Megaupload's two co-founders Kim Dotcom, formerly known as Kim Schmitz, and Mathias Ortmann were arrested in Auckland, New Zealand along with two other employees of the business at the request of US officials. It added that three other defendants were still at large.

"This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime," said a statement posted on its website.

As a result of the action of the Department of Justice, its website, along with that of the FBI were targeted by hacktivist group Anonymous last night.

While the founders of Megaupload have been charged with costing copyright holders half a billion dollars, the fact that Megaupload has managed to garner revenues of $175 million should be of equal interest.

Megaupload offers users a free but limited download service, however faster and multiple file downloads are on offer for paid subscribers. The amount of revenue earned by the website will be of interest to the distributors of music, films and TV as they seek to try and make the transition from tradition distribution channels to online distribution.

Are you a Megaupload user? Let us know in the comments what you think of the website closure and if you think if will really make any difference to those looking to download copyrighted content for free?